Reforming Transport Pricing in the European Union

Reforming Transport Pricing in the European Union

A Modelling Approach

Transport Economics, Management and Policy series

Edited by Bruno De Borger and Stef Proost

This timely book deals with the problem of pricing passenger and freight transportation within Europe. The contributors argue that current legislation affecting pricing and regulation is increasingly less successful in dealing with market failures and externalities such as congestion, air pollution, noise and accidents. Technological progress and greater European co-operation has brought increased scope for the reform of transport policies.

Chapter 14: What is wrong with transport prices in London

John Peirson, Duncan Sharp and Roger Vickerman

Subjects: economics and finance, environmental economics, transport, environment, environmental economics, transport, urban and regional studies, transport


John Peirson, Duncan Sharp and Roger Vickerman 14.1 BACKGROUND TO THE CASE STUDY In common with most large cities around the world, London is facing a major problem from traffic congestion. Overall traffic flows continue to increase while average peak time traffic speeds are around 25 km/hour overall, although can be as low as 16 km/hour in Central London (Department of Transport, 1996). Many areas (particularly Central and Inner London) have for some time experienced all-day peaks, with little discernible difference between daytime peak and off-peak traffic speeds and flows. Inevitably, this level of congestion leads to high external costs in the form of lost time in the movement of both people and goods, together with health and physical damage costs due to high pollution levels, noise and accidents. The prospect of an integrated transport policy, coordinated by the government or a local authority (LA), to deal with the problem of road congestion has been made more difficult since the privatisation of the buses and railways. Eleven separate companies now operate train services in and around London, and it will inevitably be more difficult to coordinate them into offering an integrated service than when a single operator provided all of London’s heavy rail services. The government now has very little control over the running of the railways except through the Railway Regulator, which does not have a coordinating role. Although bus services are provided by private operators, the planning of bus...

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